Wednesday, 20 February 2013 11:19

Chicago Parts Supplier Doesn’t See Value in PartsTrader but Has Ideas to Make it Better

Kent Cogswell, with more than 30 years in the parts business, is the Parts Manager and Warehouse Operations Manager for Jack Phelan Dodge of Countryside, just outside of Chicago. Cogswell, 52, has spent decades working as the largest parts Mopar wholesaler in the Midwest and is currently operating from a 35,000-square-foot stand-alone facility where they stock over 14,000 different parts totaling over $1.5 million in inventory. They have a staff of 30 and a fleet of 15 delivery trucks and have sold over $150 million in Mopar parts.

The Chicago market became part of State Farm’s PartsTrader pilot program in December. As a parts supplier, Jack Phelan Dodge is not a preferred PartsTrader provider, but a fax-only supplier and they have hundreds of customers ordering through PartsTrader. Cogswell said he has first-hand knowledge that many of the large suppliers in Chicago are also fax-only suppliers.

“If we want to do business with our State Farm Select Service shops, we have to be on PartsTrader, and you have the choice to be fax-only or a preferred supplier,” Cogswell said. “Chrysler does not allow use of the PartsTrader order as an insurance estimate, and so price matching has been affected dramatically. I can’t say it was all lack of PartsTrader orders, but we were down 150 price matching claims in December compared to the previous month.”

In the two months since he’s been a supplier with PartsTrader, Cogswell has become known for his passion, pursuing common ground and speaking his mind.

“If there is value in something, you should grasp it and move forward with it. I want everyone to make their own decision after doing the due diligence that our owners expect from us,” Cogswell said. “We are witnessing acts to the contrary.”

“It is my sincere hope that State Farm requests PartsTrader to start collecting information from all their suppliers, and not certain segments, such as only their preferred suppliers. This skews the surveys and does not create the atmosphere of searching for the needs to take this from a pilot to a win-win successful program,” he said. “I am unaware of any elite suppliers being invited to sit on a review committee to offer their perspective on PartsTrader. I have spent hours researching and deciphering information of how to integrate this program with our customer—the collision shop—and, as a positive thinker, I do have a few suggestions that could lead to solutions. I do not pretend for one second that these solutions will be easy to attain, but if observed as a pathway, it would help to bring all parties involved and onto the same landscape and create a shared goal.”

Cogswell has come up with a plan that he thinks could be a real win-win for all parties involved.

“First and foremost, State Farm has clearly stated they are attempting to reduce total losses,” Cogswell said. “Let’s think about this: shops would then fix more vehicles, which generates the need for parts that at present are not being ordered. State Farm wins; collision shops win; parts suppliers win; and PartsTrader wins.

“This can be achieved. Chrysler and State Farm have this technology (addressing total losses), or were very close to it before they pulled the plug on that OEM pilot program. Bring back that program, launch that program, then add the other OEMs. PartsTrader would then have to integrate a CollisionLink application within the PartsTrader portal. CollisionLink is ‘OE Connection’ and OE Connection should become the avenue for PartsTrader to offer ‘all its OEM parts’ allowed or needed. CollisionLink currently services the vast majority of OEMs and has been around and used for years. Bringing on CollisionLink allows hundreds of shops and their suppliers to continue using what they are already using today. State Farm should remain cooperative and build on the foundation it has established with the OEMs and take the next step weaving their past pilots and learned technologies. PartsTrader has a proven track record offering shared technology under one umbrella,” Cogswell said.

In the next step of his plan, Cogswell suggests that the bidding process be removed regarding OEM parts.

“The MSRP is this industry’s gold standard, and many sub-markets use the OEM MSRP to establish their retail prices. The bid enables or solicits MSRP for manipulation. When the MSRP is lowered, it ‘covertly’ leads to loss of margin/profits and this is a major point of contention from both the shop and supplier. Remove OEM bids and this will offer reassurance to the shops, it won’t intrude on established discounts or relationships, it also prevents putting discount ahead of the services required and it doesn’t offer a “free pass” to those suppliers who have failed to champion the business in the past. While a bid process may offer stabilizing benefits for LKQ, salvage and aftermarket, it impedes on the OEM supply base that is operating on single digit profit margins and will certainly lead to reduced cycle-time and rental fees due to parts procurement delays,” Cogswell said.

“We are seeing some PartsTrader preferred suppliers offering ridiculous discounts, and while State Farm has granted me permission to exclaim  ‘You may tell the shops we don’t expect them to take the lowest discount’ one could argue that message is moot because we are all capitalists and the shop won’t pay a nickel more than they have to.”

Cogswell believes the bidding process gives an unfair advantage to those who won’t carry the expenses to conduct business as expected by the shop and State Farm when considering State Farm’s dashboard.

“With a simple click of a computer mouse, it will allow anybody a crack at the business we have loyally served with little or no investment and or commitment,” Cogswell said. He cites an example where they have seen a preferred supplier driving over 200 miles to deliver a one-line order. “There is no way that could be a profitable situation. The bid process creates an eBay-like atmosphere and this will intensify when the shop experiences downturn in business, creating a greater value on price rather than service.”

“But,” he said, “It isn’t all about price—it’s about service. And this is the greatest value that State Farm and PartsTrader could get from us. We are pros at interpreting an order and expediting the order via our staff.”

Cogswell adds, “We are not opposing them. We are trying to find common ground but we just keep waiting.”

Cogswell would also like to see improvements in how the ranking system within PartsTrader is established.

“A strong ranking system complete with certification would reassure the elite suppliers that their past contributions are recognized and will not be infringed upon. I think a five-star supplier should have certain levels of staff, inventory and delivery service that he offers every day. I have to compete against people such as an aggressive new employee who will clear off a back desk, lay down a laptop, put a cell phone on it, and announce he’s in the wholesale business. This happens all the time. And, yes, the market eventually cleans this up, but in the short term he will be allowed to post a bid on PartsTrader because he signed up for it as a preferred supplier. And then I have to wait for him to fail, which costs everyone, including State Farm, money before the upstart is held accountable. The stronger the ranking system, the quicker the remedy.”

“We hope State Farm and PartsTrader create a shared goal with their service providers and parts suppliers,” Cogswell added.